Banks suffering 'change fatigue', says Anna Bligh

A "frenzy of regulatory activity" in the banking sector, and likelihood that the Hayne royal commission will load on additional reform, could create unintended consequences and stifle banks' ability to adapt to the digital future, Australian Banking Association chief executive Anna Bligh has warned.

"If you are working in banking and the finance sector, you are living through a constant, rolling thunder of regulatory reform, with a new wave hitting before the ink is dry on the last wave," Ms Bligh said.

"If you are feeling exhausted or starting to feel some change fatigue, it is not surprising."

Speaking to the Thomson Reuters regulatory summit in Sydney, Ms Bligh criticised both the volume of new regulation and the unreasonably short time frames for responses to major policies that will have significant impacts.

Over past decade since the financial crisis, there have been 57 inquiries into banks, resulting in 420 policy recommendations, many of which have been, or are in the process of being, implemented. Anything the banking royal commission recommends will be in addition, but Ms Bligh cautioned against loading even more change onto the sector before the impact of existing reforms have been understood.

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"Some of these changes need to be fully implemented and embedded before we can fully understand what their impact is, and before we can think about how we can improve on that last improvement," she said. "There is so much more on the way."

A lack of time to respond to key policies is also introducing new risks. She pointed to the 36-hour period for input on the design of the shock $6 billion bank levy; the seven days allowed for comment on the exposure draft for the Banking Executive Accountability Regime (BEAR); and the three-week consultation for the important bill to amend Reserve Bank and APRA crisis resolution powers. Furthermore, banks were given only five months to comply with BEAR, compared to three years banks had to prepare for the equivalent regime in the UK.

Ms Bligh said banks are suffering from a change in the process of policy development in Canberra, which would likely be permanent.

"Gone is what was a traditional, linear process of development, a process where you saw, often quite slow, iterative consideration and development, where one step logically followed the next," she said.

Rather, governments are now operating in a time Ms Bligh dubbed "instachange", where the community expects government to instantly respond to problems and also wants "instant policy, instant legislation, and instant implementation and compliance".

"And many different reforms are being coupled on top of one another before we understand the impact and implementation challenges," she said.

"The complexity of the task at hand for banks and regulators should not be underestimated."

With the Productivity Commission and Australian Competition and Consumer Commission seeking to lift competitive pressures on the sector with additional proposals, Melbourne University professor Kevin Davis, a member of the financial system inquiry, told the event "one of the risks of competition is there can be a sliding of ethical standards and behaviour and that is a real risk looking ahead".

"The royal commission will bring it to attention, but it is going to be very hard for the royal commission to say this is what is needed to change behaviour in a big organisation," he said.

ANZ Banking Group said on Wednesday its deputy chief executive Graham Hodges would retire in early May, after 27 years with the bank. ANZ CEO Shayne Elliott thanked him "for his efforts in helping reshape ANZ into the bank it is today as well as the support and advice he has provided to me over many years".